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Rates Outperforming US As Attention Turns To BOC

CANADA
  • Despite the weak US PMIs, Canadian rates are holding sizeable outperformance to US rates today, with front end GoCs -2bps (+3bps for Tsys) and the Can-US 2Y yield differential widening back out to -36bps.
  • There is equally large outperformance further along the curve, with 10YY -3.5bps (+1.5bp Tsys) to push the 10Y differential back near recent lows of -65bps in what can be seen as expectations that the more heavily-indebted Canadian economy will cool faster than the US and with analyst forecasts indicating a notable mark down in the BoC's growth projections on Wed.

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